TAX ALERT! Three Days Before It Will Be Too Late…
Greater Vancouver and Greater Toronto are seeing steady growth in taxes over the last few years. The aim in adding these taxes is to control foreign influence on the rising real-estate market, to protect housing affordability and supply, as well as increase the community’s cohesiveness.
Foreign Buyer Tax
The first tax introduced in 2016 was the provincial Foreign Buyer Tax, which has started at 15% in BC and now been raised to 20%, and has also been adopted by Ontario at 15%. In our experience, most Working Visa holders will be subject to this tax when they are buying a property. It is important to check with your notary public or a lawyer if your Working Visa exempts you from paying this tax before starting to look for a house.
Vancouver’s Municipal Vacancy Tax
The second tax, The Municipal Vacancy Tax, came into the picture in 2017 and is only applicable in Vancouver. This tax targets the vacant house phenomena (when houses are bought as assets and left vacant), which has hurt the feel of community in many Lower Mainland neighbourhoods. Exemption from this tax is done through an online declaration which takes three minutes.
Homeowner, you have only 3 days to do so as by February 4th, 2019 till the tax notice will start going to owners that neglected to declare that their house is either their own residence or rented. All you need is your folio number and access code, which can be found on your property tax notices.
Use this link to avoid paying 1% of your property’s value, which can be easily translated to a tax payment of $20,000/year:
https://vancouver.ca/home-property-development/declare-property-status.aspx
The Speculation Tax
The final tax (for now), The Speculation Tax, has been introduced by BC during 2018 aiming to prevent housing speculation, to turn empty homes into good housing for British Columbians, and to raise revenue towards supporting affordable housing. You will be exempted of the tax if your declare that your house is either rented or occupied by yourself. There are interesting exemption case studies like the situation of inheritance, divorce, separation, death or uninhabitable houses due to a hazardous condition. In these unique cases, the owner will have a reasonable-yet-limited period where the province expects the house to be brought to a livable condition and ceases to be vacant. This tax is 0.5% of property value for Canadian citizens or Permanent Residents, and 2% for foreign buyers and applies throughout the province of BC. Declaration can be submitted until July 2nd, 2019.
For more details:
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax
Please feel free to talk to us about your investment plans to make sure you avoid the higher taxes. And yes, if you live in Vancouver, please do not wait and declare your status NOW to avoid the municipal tax.